Ukraine crisis: Fears rise of Russia-fueled arms race

A soldier without identifying insignia mans a machine gun outside the Crimean parliament building shortly after several dozen soldiers took up positions there on March 1, 2014 in Simferopol, Ukraine.

Though barely a week has passed since MH17 was shot out of the sky over Eastern Ukraine, an aggressive anti-aircraft campaign is still in full swing above the territories controlled by pro-Russian separatists.

On Wednesday, Ukraine's defense ministry said two Su-25 fighters had been blown up by surface-to-air missiles, bringing the count of downed planes, not including MH17, to 14. The incident underscores a stark truth for the international community: the separatist insurgency is armed with an arsenal of growing size and sophistication. The question is: where has it come from?

When rebel brigades and units of Cossack volunteers sprouted in Crimea and eastern Ukraine this year, Russian president Vladimir Putin shrugged off questions about the source of their arms. Shops, he suggested.

But tanks cannot be bought in shops. Nor can anti-aircraft missile batteries of the kind that probably blew Malaysia Airlines flight MH17 out of the sky last week.

Dozens of online images – several of them with location tags in rebel territory and checked by the Financial Times with imaging software to ensure they are recent – confirm large amounts of such equipment now in rebel hands and in use in the fighting in eastern Ukraine.

The Kremlin has repeatedly denied providing arms to the separatists and using undercover operatives on the ground. But western intelligence chiefs say they have little doubt about the origin of the weaponry. The downing of MH17 was achieved, they allege, with sophisticated Russian arms and expertise as part of a smuggling program directed by Russian military and intelligence officials that has seen materiel moved over Ukraine's border in ever-larger amounts in recent months as Kiev's fightback has grown in intensity.

"The overall strategy – that has been missed by many in the west – has been to create a proper army," said Jonathan Eyal, international director at the Royal United Services Institute, a military and strategic think-tank. "It is not to create a guerrilla organisation. It is not a resistance movement. Russia is trying to create a proper military force."

The numbers of weapons coming into eastern Ukraine – and their capabilities – appear to be anything but small. In the months before the downing of MH17, Russian armament supplies amounted to dozens of vehicles in any given week, according to a Nato intelligence briefing.

The weekend before the Malaysian airliner was shot down, killing the 298 people on board, US intelligence officials said they detected a convoy of "up to 150 vehicles" crossing the border to separatist positions.

"Most of Ukraine's border controls have simply melted away," said Mr Eyal. "Russia has been transporting weapons across on the back of trucks as if it was in the middle of Russia."

Merkel: Russia responsible for Ukraine

CNBC's Michelle Caruso-Cabrera reports Germany Chancellor Angela Merkel places the blame squarely on Vladimir Putin and Russia for what is happening in Ukraine.

Against such a backdrop, the US is releasing few details however. Satellite images released by the US and Nato allies have been commissioned from private sector companies, so as not to give away details of high-resolution imaging and tracking capabilities.

In private, officials are less guarded. "There is a stealth war being waged," said one senior Nato official. "Russia is covertly arming the rebels en masse to specifically make these ambiguous attacks possible. And it is accelerating."

Such is the flood of weaponry that anti-Kiev forces have a shortage of skilled technicians, drivers and engineers to operate it. In Lugansk and Donetsk last month, they distributed leaflets looking for tank drivers.

Some of the equipment in use has been captured from Ukrainian forces. Eastern Ukraine is the centre of the country's large armaments industry and some Ukraine military installations and arms caches have been over-run.

But such an explanation only accounts for a small number of arms, military experts say.

In addition, the markings on the tanks and armoured vehicles pictured in use by the rebels across social media are not consistent with those of the Ukrainian military.

Most are not marked at all – echoing the sudden appearance of unmarked vehicles in Crimea before Russia annexed the territory this year.

Much of the equipment also tallies with models known to be part of Russia's mothballed armoury of weapons. Russia has 2,000 spare T-64 tanks, for example, which have officially been earmarked for destruction – part of an 18,000 tank stockpile of equipment phased out in recent military reforms.

On June 27, Ukrainian forces, after over-running a rebel position near Artemivsk, captured a T-64BV battle tank, and with it, documentation. The serial numbering of the tank shows it was manufactured in Kharkov Tank Factory in 1987, Ukrainian military officials said, and was stationed in the Russian city of Budenovskiy with Russia's 205th infantry brigade until being recently taken out of service. The tank had been fitted with batteries and other parts recently made in St Petersburg, they added.

The means by which such equipment has reached rebel hands is less clearly documented but there is circumstantial evidence.

Satellite imagery compiled by Nato intelligence services seems to show defunct Russian military equipment being shipped to Ukraine in convoys.

Snizhne – the town from where Ukraine's security service, the SBU, believes MH17 was shot down – is one of the first stopping points on what Nato intelligence officials say is one of the main routes for illicit arms into the country from Russia.

Nato images from late June, for example, show T-64 tanks being loaded on to transporters in Novocherkassk, about 50km from the Dolzhansky border crossing southeast of Snizhne, in what it has identified as a base – a previously little-used military site – for a logistical campaign to get heavy arms into Donetsk and Luhansk.

The questions that remain unanswered, however, concern exactly who is controlling such an operation.

So far, Moscow has denied strenuously that it has supplied the anti-Kiev insurgents with weaponry. But the Kremlin has also skirted proposals for international observers from the Organisation for Security and Co-operation in Europe to be sent to border crossings.

"Obviously, you can't just hand over these weapons systems without authorisation from high up," said Keir Giles, a Russia expert and director of the Conflict Studies Research Centre at Chatham House in London. "There has to be significant military and intelligence authority to make this happen. Nobody is going to be doing this without authority from an extremely high level."